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Where Do I Start - The Intelligent Investor’s Way
By Kai | August 1, 2007
For someone new to investing, the foremost question is “Where do I start ?”.
There is no lack of options and ways to build your wealth through investing - that itself is a nice thing to know. There are thousands of funds, stocks and bonds to choose from to put your money. Similarly there is a wide array of avenues both online and offline (brokerage firms, fund management companies etc) for you to pick and choose.
The difficult part is wading through the crowded marketplace and finding what suits your needs. You want to get the most returns out of each dollar. Every dollar is hard-earned cash, you want to make a well-informed decision giving you the best outcome.
So where do we start ? How do we choose what to invest in from the thousands of options available ?
The Way of the Herd
One way is to follow the herd, which is what I call the “uneducated” way of the masses. The uneducated investor belongs to the 95% of people. He follows what the people around him do, listens to the so-called financial “gurus” on the news who “advise” him to buy this stock today and another stock tomorrow. He jumps in on news reports on “Hot Stocks” and throws his cash into the market. The next day, he hears another news report that “The Dow has plunged to its new low”, and he calls his broker frantically to sell his stocks.
What’s the problem with this approach ? There is no strategy in the way he invests. He puts his money based simply on heresay and relies on those whom he hopes are more financially intelligent than him and so give him the right advice. Winning is based on luck - like hitting the jackpot in the casino. But how many times does he have to hit the jackpot to cover the losses he incurred ? It’s a well-known statistic that over the long run, the gambler actually ends up losing.
The Intelligent Investor’s Way
So let’s look at another approach which will give a better rate of return than purely throwing money into the jackpot machine. This is the way of the educated 5% of the population.
There is a science to becoming a successful investor. It is not space theory belonging only to the mental vaults of the likes of Warren Buffett. To become a good investor, we only need to find out HOW. Successful investors apply a certain set of skills, knowledge and methodology to achieve results. If we can learn and acquire the same set, then we will have a much higher chance of succeeding and avoid the trial and error using our hard-earned money.
Let’s Get Started
There are tons of information on investing both offline and online. It’s easy to get overwhelmed by the information overload or even confused as you try to decipher the pros and cons of different tactics. This is especially so for new investors who do not have any financial background.
What I will attempt to do here is to shorten the learning curve for you. Drawing from my own experience as an investor, I will share with you the skills, knowledge and methodology in a sequential step-by-step fashion. I hope that by doing so, you will be able to accelerate your learning and play the investing game with confidence. The faster you learn, the more time you save, and the earlier you can start investing and building your wealth nest !
With that said, let’s get started on the 4 pillars of investing…
Topics: Getting Started |
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